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Do you know it takes 13 steps to pay a teacher?

Updated: May 24

Did you know that it takes this many steps for a teacher to be paid and the risk at each step that has to be managed costing a studio $15 per teacher per payment run.



Whether you're a seasoned yoga studio owner or a yoga practitioner turned teacher, navigating the process of teacher remuneration can be challenging. It's a multi-faceted process that requires meticulous attention, a keen eye for detail, and proficient organisational skills. To shed light on this intricate procedure, here’s a detailed, step-by-step guide to the typical payment process for yoga teachers, along with the risks and potential pitfalls at each stage.


1. Signing In

The yoga teacher arrives at the studio and signs in to teach a class. This is crucial as it officially logs the teacher's attendance and serves as the first record of their service.

Risks: Failure to properly sign in can result in discrepancies in attendance records, leading to payment disputes and delays.


2. Teaching the Class

The teacher guides the class and may also book the students in. They then impart their knowledge and skills to the students. Once the class concludes, the teacher departs. This process is normally managed with studio management software that is focused on managing students and their payments.

Risks: If class details (duration, attendance) are not accurately recorded, it can affect the invoicing process.


3. Invoice Creation

The teacher generates an invoice based on previously agreed-upon terms, such as the number of classes taught, session duration, student attendance, or a fixed rate.

Risks: Errors in invoice creation, such as incorrect calculations or missing details, can cause delays and necessitate corrections.


4. Invoice Submission

The teacher submits the invoice, typically 1-2 weeks later, covering all classes conducted during that period.

Risks: Delays in submission can lead to late payments. Additionally, if invoices are submitted inconsistently, it can disrupt cash flow and accounting schedules.


OR The Studios does step 3 and 4 which helps to make life easier for the Teacher, but costs the Studio time in doing that, but worth the effort as decreases the invoice verification process as now flip to be done by the Teacher. It still has a time and costs for this, but has less hassle and manual checking work.


5. Invoice Verification

A bookkeeper or accountant checks the invoice against studio records, ensuring all information aligns. If there's an error, the bookkeeper returns it to the teacher for correction.

Risks: Verification is time-consuming and prone to human error. Mistakes can lead to incorrect payments or further delays while issues are rectified. Examples of errors is the teacher is new and hasn’t been onboarded, bank details are wrong or the teachers changed classes.


6. Accounting System Update

Once verified, the bookkeeper updates the accounting system with the new data.

Risks: Failure to promptly update the system can lead to discrepancies and complicate financial tracking and reporting.


7. Approval Process

The updated invoice goes through a checking and approval process, usually by a higher authority in the studio who authorises payments.

Risks: Bottlenecks in the approval process can cause significant delays, especially if the approver is unavailable.


8. Payment Decision

The studio decides when to make the payment.

Risks: Poor timing or mismanagement can result in late payments, which can harm relationships with teachers and affect their financial stability.


9. Bank Procedures

The bookkeeper exports the payment data to the bank to process the transaction.

Risks: Errors in data export or bank processing issues can delay payments. Manual entry increases the risk of mistakes.


10. Payment Approval

The studio gives final approval for the bank payment.

Risks: Any delays or errors in this step can prevent timely payment. It adds another layer of potential human error.


11. Payment Reconciliation

The bookkeeper reconciles the payment, ensuring the bank transactions match the company records.

Risks: Discrepancies between bank transactions and company records can cause significant issues, requiring time-consuming investigations and corrections.


12. Teacher Reconciliation

Upon receiving the payment, the teacher reconciles it against their outstanding invoices to ensure they are paid correctly and in full.

Risks: If teachers find discrepancies, they must communicate back to the studio, causing further delays and administrative burden.


13. Error Handling

If there's any discrepancy or error, the teacher sends it back for rectification.

Risks: Each round of corrections adds to the delay, increases frustration, and can lead to strained relationships between teachers and the studio.


The cost of the current process

As one can imagine, this process, when repeated for multiple teachers—say, 90—can become a daunting task. A business owner reported that paying 90 teachers on a fortnightly basis used to cost around 340 hours a year, translating to approximately $40,000 per annum when factoring in super, sick leave, holidays, public holidays, insurance, payroll tax, HR management, and additional accounting expenses. Additionally, when staff are on holiday or sick, a backup person is needed to ensure payments continue, highlighting the importance of consistent payment processes for business continuity.


The breakdown of the maths

Every pay run for 90 teachers


Minutes

Minutes

Get report from system

15


Send to Studio Manager for checking and fixing due to teacher changes

60


Import into payrun sheet and run calc's

10


Check Calculations

30


Fix teacher changes

30


Check summary data

30


Import to Invoice Creation

20


Generate Invoices and send to teachers

20


Stage 1 Total


215

Teachers reply with errors

30


Connect with the studio manager and double check

30


Update Details and resend

10


Create Final Invoices and triple check

20


Export for Xero and Import

20


Generate Payment report

10


Get Payment Checked and Approved

40


Export Payment Report

10


Import into Bank

10


Do Bank Run

10


Get Approval Done

10


Go to Xero and flag invoice notice of payment done

20


Reconcile payments

20


Stage 2 Total


240

Total


8 hours

Add teacher interactions, onboarding, team interactions every 2 weeks


2 hour



10 hours



260 Hours pa

As this needed to be done every week, even when any of the team are on holiday, sick or away adds another 2 months (16%) = 300 hours. It is a pressure situation for all.

In this use case, the studio has built a number of tools to automate parts of this work like the calculations, invoice creation and auto emailing functions saving time and minimising some of the problems.


How much does a Bookkeeper really cost



Salary

$75,000

Super 12.5%

$9,375

Overheads (35%)

$26,250


$110,625

Hours Worked


52 @ 37.5

1,950

Less Holiday,Sick (6 weeks)

225

less breaks, meetings (6 hrs per week)

260

10 days on other tasks (hrs)

75

Final productive hours

1,390



Final true hourly rate

$80.00


300 hours x $80 = $24,000


Next is to add to this is the cost of other support team to make this work, like the management, HR, accountants, auditors, filings and keeping teachers happy and potential extra costs of payroll tax of 4.5%. This all up adds another $10k ⇒ $34,000 ⇒ $32 per month per teacher.


The hidden cost in this process needs to be documented, new people need to trained up as well as needed and as a multi-step process and also the filings like BAS return and EOY work and reports.


 

This is an area everyone under estimates as most just think about the parts they see and think that is just one person doing the job and forget all the hidden activities and the true costs.

 

At every step, there are risks for failure which adds to the costs and frustration for all as the teacher MUST be paid, as no teacher, no business which why we hear the call of “I hate paperwork” as the studios is always in the firing line for any delay or if anything that goes wrong.


The problem is made worse in that the operational management software only creates reports and doesn’t do anything beyond creating transparency problems which creates an underlying problem between studio and teacher.


Final maths

If a Studio has 15 teachers and paying every 2 weeks, they are spending $6k per year just to pay for the right to move money to pay their teachers.


The wrinkle in the process for Australian Studios

Superannuation requirement to Independent workers is now a requirement after a 2023 Court case that Superannuation must be paid for Independent contractors who works under a contract that is wholly or principally for their labours. This requires much data entry, data recording and process of payment as required, and the holding of funds and fines and risks for non payment. For many Teachers, the pay they were getting before will decrease as technically their pay included Super and was their requirement to make payment unless they are being paid by a different company who takes on that responsibility which is another grey area. This meant to be done every 3 months, but requires the business to make sure it is managed so they have the cash to pay on the due date.


The Solution: Automated Payment Systems

Thankfully, automated payment systems like Kula Pay have significantly streamlined this process. Kula Pay has been calculated to reduce annual time spent on the payroll process to just 60 hours, eliminating the need for a backup person or the stress of getting it done on time right. The cost now amounts to $420 per month for 90 teachers, plus $400 in time for double-checking, versus the previous $3,400 per month. The most significant advantage is the consistency of the payment process, independent of any single person and the release of the stress of having to repeat this every week perfectly.


Kula Pay allows the teacher to be paid as soon as the class starts as the students have already paid for the class before they start, changing the risk and stress profile for all.


Secondary Benefits

Moreover, with automated systems, businesses no longer need extra procedures to protect teacher bank details or manage changes, reducing the risk of hacking. The security and efficiency improvements reduce administrative overhead and provide peace of mind.

And for the Teacher, there is a clear view of what is happening as it happens as it is always best to sort something out when fresh instead of 3-4 weeks later.


Conclusion

While the process of remunerating a yoga teacher may seem complex and time-consuming, with careful management and modern payment solutions, it can become a much more efficient and hassle-free experience. By minimising risks and errors, automated systems ensure that teachers are paid accurately and on time, maintaining a positive and professional relationship between the studio and its teachers.

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1 commentaire


Hey what a great post. Can you possibly do the same for a yoga teacher

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